An email obtained by Bloomberg highlighted Musk’s instructions to his employees telling them that Tesla’s third-quarter results would be the company’s last chance to show investors that financials have improved ahead of the next round of funding.
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According to Bloomberg, Musk told employees of the Palo Alto-based company in an email last week that the company is “on the razor’s edge” to have a good third quarter. It’s possible that some investors have reacted to the focus by Musk on profit, although on Wall Street the bull camps (Dougherty $500 PT) and bear camps ($UBS $160 PT) have really just reiterated prior stances this week. The average 12-month price target among analysts that have issued ratings on the stock in the past year is $269.77. Five equities research analysts have rated the stock with a sell recommendation, thirteen have issued a hold recommendation, ten have assigned a buy recommendation and two have given a strong buy recommendation to the company. Model 3 reservations skew young and urban.
Fundamentalists cringe at the company’s cash burn, along with the number of projects that Musk has bolted on to the electric-car company.
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“I am concerned about the profitability of the Model 3 given the challenging economics of producing a vehicle at that price point given the still-high battery costs”, he said.
Even more important, we will need to raise additional cash in Q4 to complete the Model 3 vehicle factory and the Gigafactory. Morgan Stanley analyst Adam Jonas had a target of $465 last September. He has since lowered it three times, with the latest coming in June after the SolarCity deal was announced.
“We continue to believe that demand is there for the Model 3 and any future vehicles, and that’s why we remain bullish”, Anderson said in an email. Royal Bank Of Canada lowered their price target on Tesla Motors from $252.00 to $242.00 and set a “sector perform” rating on the stock in a research report on Wednesday, May 25th.
Anderson also said Tesla hasn’t only the “technology lead” but a “brand” image that will allow it to “take considerable market share”.
Tesla is now calling on investors to approve the acquisition of SolarCity Corp (NASDAQ:SCTY).
In addition to cost-cutting, Musk likewise wishes to push to provide “every auto we possibly can”, to help fulfill Tesla’s objective of providing 80,000 vehicles this year.
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Musk noted that in the fourth quarter, spending for the Model 3 sedan will “force” the company “into a negative position” until the Model 3 reaches full production – an event that isn’t expected to happen until late 2017.
